During the past few weeks, most of us have probably been distracted by the Fourth of July holidays, summer vacation, and/or the harrowing nightmares that are, sadly, becoming all the more common on the daily news. (#prayforpeace people!) But if you have been following the music industry you have probably heard the repercussions, mostly negative, of the DOJ’s recent consent decree ruling regarding Performance Rights Organizations (PRO) ASCAP and BMI.  If you’d like to get up to speed, there’s some great articles here and here in favor of the ruling, and some articles here and here against the ruling.

So…what exactly happened? The present issue has a long and complicated history, and ASCAP has an excellent Q & A section on their website.

As they note, the Department of Justice (DOJ) announced in 2014 that it would review ASCAP and BMI’s 75 year old consent decrees which govern their operations, specifically the licensing of music. As pointed out by ASCAP, the consent decrees “were originally written in 1941 and haven’t been updated since the invention of the iPod.” We’re all in favor of modernizing the law, right? (You’re supposed to say “yes”.)

ASCAP, BMI, and songwriters were hopeful that the DOJ would amend and modernize the consent decrees per the recommendation of ASCAP and BMI in order to modernize the laws regarding licensing (among other things). After years of review, the DOJ decided that not only would it NOT consider ASCAP and BMI’s requests to modernize and update the consent decrees, but that ASCAP and BMI should be force to issue what are known as “100% licenses”.

It has been rumored for some time that the DOJ would issue such an order. What “100% licensing” means is that on songs written by more than one writer, each writer can issue a license for not just their share of the song, but “100%” (hence the name) of the song. This replaces what is known as “fractional licensing”, which songwriter and blogger Shelly Peiken affectionately describes as “the effective, efficient and peaceful way the music licensing system has functioned for years.”

If you’d like to fall down a thoroughly researched rabbit hole concerning fractional licensing, you can review this 33 page document from songwriting advocate and Congressman Doug Collins (R-Georgia). You may remember Doug from his efforts on the Songwriter Equity Act. As noted in his report, “publishers and songwriters frequently have understandings that they are not free to license each other’s respective shares.”  After all, common sense dictates that you should not have the right to license shares of what you don’t have, and should be able to license a share of what you DO have, right? (The answer is “yes”). Collins notes that 100% licensing would “vitiate important principles of copyright law, interfere with creative collaboration s among songwriters, negate private contracts, and impermissibly expand the reach of the consent decrees”.   So, in a nutshell, those are some of the arguments against 100% licensing.

Not surprisingly, the DOJ’s decision has been universally condemned in statement by the Presidents of BMI and ASCAP. But is this Consent Decree the final say on this issue? The answer to that question involves a brief analysis of 1) what exactly a consent decree is, 2) who is bound by it, and 3) can it be appealed?

CONSENT DECREE

When reading various articles and opinions on the ruling, it is important foremost to understand the procedure at play here. From a procedural perspective, this was a Consent Decree. According to Section 9.2.B.1 of the Federal Practice Manual, a Consent Decree is “an agreement of the parties and is embodied in an injunctive order of the court, signed by the judge, and entered as the judgment of the court.” .

As such it is a strange legal creature in that it has “‘attributes of both contracts and judicial decrees”. Local 93, Int’l Ass’n of Firefighters v. City of Cleveland, 478 U.S. 501, 519 (1986). Accordingly, the Consent Decree is only binding upon the parties. As noted below, the present consent decree involves PRO’s ASCAP and BMI, but not SESAC. Nevertheless, SESAC has been closely following the issue and has publicly opposed the DOJ’s decision.

A Consent decree is very similar to an arbitration and/or mediation program-it is a process whereby the parties can seek to resolve a dispute through the Courts without having to resort to a traditional (read: time and money consuming) trial. The parties submit a dispute to the Court, which issues an Order. As noted in the Federal Practice Manual, Consent Decrees are often utilized when an effective remedy requires major changes in an agency’s mode of operation, such as promulgating new rules, establishing new practices, and monitoring implementation and outcomes. Such is definitely the case in the present matter, where ASCAP and BMI are trying to modernize archaic laws on music licensing.  My guess is that ASCAP and BMI felt that the Consent Decree was the most efficient and effective method of resolving this issue, but hadn’t counted on the DOJ ruling out of left field the way it did.

Are Consent Decrees appealable? I’ll give you a big fat lawyer’s “maybe”. As consent decrees are part Court Order and part Contract, it will depend on a variety of factors, including but not limited to (see what I did there?) whether the parties agree whether the Consent Decree will be binding or not. For further reading on the appeals and Consent Decrees check out Robert R. Zitko, The Appealability of Conditional Consent Judgments 1994 U. Ill. L. Rev. 241. As noted below, SESAC hints at future legal action which leads me to believe that this Consent Decree is most likely appealable, although I have not been directly involved with the case and thus am not familiar with all the nuances of the Consent Decree’s various sections.

Fellow PRO SESAC, although not bound by the consent decree, nevertheless also issued a statement calling the DOJ’s decision “a monumental departure from the industry practice that has governed the performing rights marketplace for many decades” and notes that they submitted  comments to DOJ “arguing strongly against adopting [100% licensing]” and urging the DOJ to continue using fractional licensing “because it is in the best interest of songwriters and publishers”.

As further noted in SESAC’s comments, the official decision should be made public by the end of July, whereupon the DOJ must “discuss the recommendations with ASCAP and BMI, and have the recommendations approved by the separate federal judges that oversee ASCAP’s and BMI’s consent decrees.” In what could be construed as a not-so-veiled threat, SESAC also states that the DOJ’s ruling “could also be addressed in court proceedings or, alternatively, Congress could intervene with their views”. Don’t be surprised to see SESAC, ASCAP, and BMI’s legal teams conferring on the next move, with ASCAP and BMI attempting to appeal this ruling in Court with SESAC’s attorneys filing “friend of the court” briefs in support. No doubt there will be some heavy lobbying efforts which you’ll probably be seeing soon on social media. If I were quarterbacking this litigation (I’m not) I would seek appellate recourse in the courts and use the impending litigation as an opportunity to drum up support for BMI and ASCAP’s position in an attempt to seek Congressional relief. On that note, if you support songwriters and think the DOJ “got it wrong” on this issue (it did) don’t hesitate to contact your Senator and/or Congressperson and let them know you are not happy with the DOJ’s ruling.

You can also mention that you support the Songwriter’s Equity Act, which I have previously discussed on my blog. And of course, feel free to liberally utilize the hashtag #StandWithSongwriters when you’re posting on social media.

So what do you think? Did the DOJ get it right or wrong? What do you think will come of this Consent Decree? Is it the end of music as we know it, or an inconsequential ruling with little precedential value?  As always, feel free to hit me up in the comments section or at vegasentertainmentlawyer@gmail.com with your thoughts, comments, or questions!

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